Transfer Pricing at Microsoft

• Values:

• Division A Cost: $2,000,000
• Division B Revenue: $3,000,000
• Negotiated Transfer Price: $2,500,000
• Requirements:

0. Analyze the transfer pricing issue between Microsoft’s divisions.
1. Calculate the divisional profit under the negotiated transfer price.
2. Discuss the challenges of transfer pricing in multinational corporations.
3. Recommend strategies to improve transfer pricing policies at Microsoft.